AUSTRALIA could see the end to a three-year slide in barley production this season if growers opt for a little more of what is arguably the country’s lowest cost and lowest risk winter crop.
ABARES data show the nation last year planted 4.1 million hectares of barley yielding 13.4 million tonnes (Mt), down from a record 5.5Mha in 2020-21 yielding 14.6Mt.
While wheat area in the past two seasons has been static at 13Mha, producing 36.3Mt in 2021-22 and 36.6Mt in the harvest just gone, canola has made thumping gains.
The oilseed has climbed from 2.6Mha producing 4.8Mt in 2020-21 to 3.7Mha producing 7.3Mt in 2022-23, but disease concerns and its appetite for nitrogen are likely to see a drop in area in 2023-24.
With a drier end to the upcoming growing season on the forecast, and disease concerns aplenty too, this could well be barley’s year.
In its February Barley S&D Report released Friday, Lachstock Consulting is forecasting a lift in barley area.
“For our first look at numbers for 2023-24, we are assuming that the area planted to barley will increase year on year as area is switched back out of canola into barley, reflecting cost pressure and the increased chance of a drier year,” the Lachstock report said.
Life without China
Since China closed the door on Australian barley in 2020, exporters have had to find new markets for malting barley, or sell the premium product into the stockfeed market, with stalwart Saudi Arabia becoming the biggest customer in China’s absence.
Around 40 percent of Australian barley is generally consumed domestically, with maltsters and the stockfeed market jointly getting through around 4.5Mt per annum.
When China was buying as much Australian barley for malting as could be supplied, malting accounted for up to 40pc of exports.
Malting’s share of Australian barley exports in the year to September 2022 fell to 11pc of the total 8.1Mt shipped, and trade sources say the price disincentive for growers to move away from growing barley to malting specifications has dwindled.
Without China in the market, something similar can be expected in the current marketing year.
Australia’s Minister for Trade Don Farrell has in recent weeks spoken in the media about the improving relationship with China, and positive signs from a resumption of coal and lobster exports.
However, the Australian Government has given no indication it will withdraw its case before the World Trade Organization with regards to China’s claim about Australia dumping barley.
A WTO document released in December 2022 said the panel looking at the case was expected to issue its final report in the current quarter.
More malting destined for feed
Australia’s two biggest barley-exporting states, Western Australia and South Australia, received solid amounts of malting in the harvest just gone, and a fair proportion of it is likely to go into Asian and Middle East feed or food markets.
According to Lachstock’s latest barley S&D, CBH Group receivals in WA have been around 19pc malting and 81pc feed, consistent with 2021-22.
In its SA system including two sites in western Victoria, Lachstock’s report indicates Viterra receivals comprise around 27pc malting and food and 73pc feed.
After SA’s wet end to the growing season and its late harvest, Lachstock described the result as “pretty impressive”, and well above the 20:80 malting-to-feed split received in 2021-22.
Altered premiums influence growers
Much of New South Wales was pounded by rain and waterlogging last year.
Despite this, growers in northern NSW managed to deliver an above-average portion of malting barley, and into direct supply agreements.
Wet conditions meant growers in central and southern NSW generally had trouble meeting malting specs, and Victoria was a mixed bag.
In the northern feed market, barley which includes some downgraded malting is trading at evens with wheat, a rare phenomenon that points to some beef feedlots being wedded to barley in their rations.
In NSW’s Port Kembla zone, and Victoria’s three port zones, barley is struggling to find places on the shipping stem amid canola, wheat and pulses.
Some low test weights which tell the tale of an overly wet season have turned some in the stockfeed sector away from barley and on to wheat.
With export demand for wheat much more lively, this has blown out the discount of barley to wheat to around $40/t.
Malting barley’s premium over feed early in eastern Australia’s most recent harvest got to around $200/t as maltsters and traders scrambled to cover requirements.
The better-than-expected quality of southern barley has seen that premium sink to around $45/t over feed, or $420-$430/t delivered Geelong or Melbourne late last week, according to Lachstock.
The west’s discount again indicates a shipping stem focused on wheat and canola, and filled domestic demand.
“Barley prices in WA have firmed in recent weeks but are trading at around a $60/t discount to the east,” Lachstock said.
Choices for growers
Plenty of growers are expected to plant accredited malting varieties this season, but sources report feed varieties like Rosalind with higher yield potential are rising in popularity.
Sparkeag principal Matthew Sparke is based at Horsham in Victoria’s Wimmera, and said how much barley gets planted this year will depend on price indications, and the season.
Apart from longer-season varieties suited to high rainfall areas, barley has a shorter growing season than wheat, and Mr Sparke said a late break in the season could see wheat give up some area to barley.
“If we get a late start, they’ll go to barley,” Mr Sparke said.
“Maybe the fact that we’ve got talk of a drier spring, and barley is a bit less of risk because it fills earlier, will lift the area.”
He said malting’s premium over feed has failed to inspire increased area in the past couple of seasons.
“If you’ve got a $5 premium over feed, why would you bother? You’d just go for tonnes.”
Mr Sparke said Planet barley, as well as Clearfield varieties like Spartacus and Maximus, were popular for malting, with good yield potential a fall-back if the sample does not make malting specifications.
He said Planet can achieve yields of up to 8t/ha in the southern Wimmera, and such results soften the impact of missing malting specs.
“The model we work on is we grow tonnes, and if it’s malting, that’s a bonus.”
Behind WA, NSW is typically Australia’s second-biggest barley-producing state, although its sodden growing season saw it come in behind Vic and SA also last year.
NSW growers are weighing up considerable disease risk, and wheat’s susceptibility to crown rot in a dry spring could see a late swing to barley, particularly if planting rain to wet the topsoil arrives in late May or June.
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